Illinois 2025-2026 Regular Session

Illinois Senate Bill SB1688 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1688 Introduced 2/5/2025, by Sen. David Koehler SYNOPSIS AS INTRODUCED: 35 ILCS 405/2 from Ch. 120, par. 405A-235 ILCS 405/5 from Ch. 120, par. 405A-5 Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. Provides for a special use valuation to provide that the value of the qualified farm property shall be calculated without regard to certain limitations under the Internal Revenue Code. Makes changes concerning the definition of "qualified heir". LRB104 07649 HLH 17693 b A BILL FOR 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1688 Introduced 2/5/2025, by Sen. David Koehler SYNOPSIS AS INTRODUCED: 35 ILCS 405/2 from Ch. 120, par. 405A-235 ILCS 405/5 from Ch. 120, par. 405A-5 35 ILCS 405/2 from Ch. 120, par. 405A-2 35 ILCS 405/5 from Ch. 120, par. 405A-5 Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. Provides for a special use valuation to provide that the value of the qualified farm property shall be calculated without regard to certain limitations under the Internal Revenue Code. Makes changes concerning the definition of "qualified heir". LRB104 07649 HLH 17693 b LRB104 07649 HLH 17693 b A BILL FOR
2	2	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1688 Introduced 2/5/2025, by Sen. David Koehler SYNOPSIS AS INTRODUCED:
3	3	35 ILCS 405/2 from Ch. 120, par. 405A-235 ILCS 405/5 from Ch. 120, par. 405A-5 35 ILCS 405/2 from Ch. 120, par. 405A-2 35 ILCS 405/5 from Ch. 120, par. 405A-5
4	4	35 ILCS 405/2 from Ch. 120, par. 405A-2
5	5	35 ILCS 405/5 from Ch. 120, par. 405A-5
6	6	Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. Provides for a special use valuation to provide that the value of the qualified farm property shall be calculated without regard to certain limitations under the Internal Revenue Code. Makes changes concerning the definition of "qualified heir".
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12	12	1 AN ACT concerning revenue.
13	13	2 Be it enacted by the People of the State of Illinois,
14	14	3 represented in the General Assembly:
15	15	4 Section 5. The Illinois Estate and Generation-Skipping
16	16	5 Transfer Tax Act is amended by changing Sections 2 and 5 as
17	17	6 follows:
18	18	7 (35 ILCS 405/2) (from Ch. 120, par. 405A-2)
19	19	8 Sec. 2. Definitions.
20	20	9 "Federal estate tax" means the tax due to the United
21	21	10 States with respect to a taxable transfer under Chapter 11 of
22	22	11 the Internal Revenue Code.
23	23	12 "Federal generation-skipping transfer tax" means the tax
24	24	13 due to the United States with respect to a taxable transfer
25	25	14 under Chapter 13 of the Internal Revenue Code.
26	26	15 "Federal return" means the federal estate tax return with
27	27	16 respect to the federal estate tax and means the federal
28	28	17 generation-skipping transfer tax return with respect to the
29	29	18 federal generation-skipping transfer tax.
30	30	19 "Federal transfer tax" means the federal estate tax or the
31	31	20 federal generation-skipping transfer tax.
32	32	21 "Illinois estate tax" means the tax due to this State with
33	33	22 respect to a taxable transfer.
34	34	23 "Illinois generation-skipping transfer tax" means the tax
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38	38	104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1688 Introduced 2/5/2025, by Sen. David Koehler SYNOPSIS AS INTRODUCED:
39	39	35 ILCS 405/2 from Ch. 120, par. 405A-235 ILCS 405/5 from Ch. 120, par. 405A-5 35 ILCS 405/2 from Ch. 120, par. 405A-2 35 ILCS 405/5 from Ch. 120, par. 405A-5
40	40	35 ILCS 405/2 from Ch. 120, par. 405A-2
41	41	35 ILCS 405/5 from Ch. 120, par. 405A-5
42	42	Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. Provides for a special use valuation to provide that the value of the qualified farm property shall be calculated without regard to certain limitations under the Internal Revenue Code. Makes changes concerning the definition of "qualified heir".
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45	45	A BILL FOR
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51	51	35 ILCS 405/2 from Ch. 120, par. 405A-2
52	52	35 ILCS 405/5 from Ch. 120, par. 405A-5
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71	71	1 due to this State with respect to a taxable transfer that gives
72	72	2 rise to a federal generation-skipping transfer tax.
73	73	3 "Illinois transfer tax" means the Illinois estate tax or
74	74	4 the Illinois generation-skipping transfer tax.
75	75	5 "Internal Revenue Code" means, unless otherwise provided,
76	76	6 the Internal Revenue Code of 1986, as amended from time to
77	77	7 time.
78	78	8 "Non-resident trust" means a trust that is not a resident
79	79	9 of this State for purposes of the Illinois Income Tax Act, as
80	80	10 amended from time to time.
81	81	11 "Person" means and includes any individual, trust, estate,
82	82	12 partnership, association, company or corporation.
83	83	13 "Qualified heir" means a qualified heir as defined in
84	84	14 Section 2032A(e)(1) of the Internal Revenue Code.
85	85	15 "Resident trust" means a trust that is a resident of this
86	86	16 State for purposes of the Illinois Income Tax Act, as amended
87	87	17 from time to time.
88	88	18 "State" means any state, territory or possession of the
89	89	19 United States and the District of Columbia.
90	90	20 "State tax credit" means:
91	91	21 (a) For persons dying on or after January 1, 2003 and
92	92	22 through December 31, 2005, an amount equal to the full credit
93	93	23 calculable under Section 2011 or Section 2604 of the Internal
94	94	24 Revenue Code as the credit would have been computed and
95	95	25 allowed under the Internal Revenue Code as in effect on
96	96	26 December 31, 2001, without the reduction in the State Death
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107	107	1 Tax Credit as provided in Section 2011(b)(2) or the
108	108	2 termination of the State Death Tax Credit as provided in
109	109	3 Section 2011(f) as enacted by the Economic Growth and Tax
110	110	4 Relief Reconciliation Act of 2001, but recognizing the
111	111	5 increased applicable exclusion amount through December 31,
112	112	6 2005.
113	113	7 (b) Except as provided in subsection (c), for For persons
114	114	8 dying after December 31, 2005 and on or before December 31,
115	115	9 2009, and for persons dying after December 31, 2010, an amount
116	116	10 equal to the full credit calculable under Section 2011 or 2604
117	117	11 of the Internal Revenue Code as the credit would have been
118	118	12 computed and allowed under the Internal Revenue Code as in
119	119	13 effect on December 31, 2001, without the reduction in the
120	120	14 State Death Tax Credit as provided in Section 2011(b)(2) or
121	121	15 the termination of the State Death Tax Credit as provided in
122	122	16 Section 2011(f) as enacted by the Economic Growth and Tax
123	123	17 Relief Reconciliation Act of 2001, but recognizing the
124	124	18 exclusion amount of only (i) $2,000,000 for persons dying
125	125	19 prior to January 1, 2012, (ii) $3,500,000 for persons dying on
126	126	20 or after January 1, 2012 and prior to January 1, 2013, and
127	127	21 (iii) $4,000,000 for persons dying on or after January 1,
128	128	22 2013, and with reduction to the adjusted taxable estate for
129	129	23 any qualified terminable interest property election as defined
130	130	24 in subsection (b-1) of this Section.
131	131	25 (b-1) The person required to file the Illinois return may
132	132	26 elect on a timely filed Illinois return a marital deduction
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143	143	1 for qualified terminable interest property under Section
144	144	2 2056(b)(7) of the Internal Revenue Code for purposes of the
145	145	3 Illinois estate tax that is separate and independent of any
146	146	4 qualified terminable interest property election for federal
147	147	5 estate tax purposes. For purposes of the Illinois estate tax,
148	148	6 the inclusion of property in the gross estate of a surviving
149	149	7 spouse is the same as under Section 2044 of the Internal
150	150	8 Revenue Code.
151	151	9 (c) For persons dying on or after the effective date of
152	152	10 this amendatory Act of the 104th General Assembly whose
153	153	11 estates contain property that qualifies for the special use
154	154	12 valuation under subsection (d) of Section 5 of this Act, and
155	155	13 who make an Illinois estate tax election under that
156	156	14 subsection, whether the person who is required to file an
157	157	15 Illinois return makes a special use valuation election on his
158	158	16 or her federal estate tax return or not, an amount equal to the
159	159	17 full credit calculable under Section 2011 or 2604 of the
160	160	18 Internal Revenue Code as the credit would have been computed
161	161	19 and allowed under the Internal Revenue Code on December 31,
162	162	20 2001, without the reduction in the State Death Tax Credit as
163	163	21 provided in Section 2011(b)(2) of the Internal Revenue Code or
164	164	22 the termination of the State Death Tax Credit as provided in
165	165	23 Section 2011(f) as enacted by the Economic Growth and Tax
166	166	24 Relief Reconciliation Act of 2001, but recognizing the
167	167	25 exemption amount calculated under this subsection (c), which
168	168	26 shall be deducted from the net estate value after the net
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179	179	1 estate value is computed in accordance with this Act, and with
180	180	2 reduction to the adjusted taxable estate for any qualified
181	181	3 terminable interest property election, as defined in
182	182	4 subsection (b-1) of this Section. In no event shall the
183	183	5 exemption under this Section reduce the estate's value to less
184	184	6 than zero.
185	185	7 For persons dying on or after the effective date of this
186	186	8 amendatory Act of the 104th General Assembly whose estates
187	187	9 qualify under this subsection (c), the exemption amount under
188	188	10 this subsection (c) shall be the base exemption amount for the
189	189	11 calendar year in which person dies, plus, if the person
190	190	12 qualifies for inclusion of the deceased spousal unused
191	191	13 exemption amount under the provisions of this subsection, the
192	192	14 indexed deceased spousal unused exemption amount. The Attorney
193	193	15 General shall annually publish a table containing the annual
194	194	16 multipliers to be used when calculating the indexed deceased
195	195	17 spousal unused exemption amount.
196	196	18 For persons dying on or after the effective date of this
197	197	19 amendatory Act of the 104th General Assembly and before
198	198	20 January 1, 2026, the base exemption amount under this
199	199	21 subsection (c) is $6,000,000. On January 1, 2026, and on
200	200	22 January 1 of each subsequent year, the base exemption amount
201	201	23 under this subsection (c) for person dying during that
202	202	24 calendar year shall be the base exemption amount for the
203	203	25 previous calendar year, multiplied by one plus the percentage
204	204	26 increase, if any, in the Consumer Price Index for the 12 months
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215	215	1 ending in September of the calendar year immediately preceding
216	216	2 the calendar year in which the increase takes place, rounded
217	217	3 to the nearest whole dollar.
218	218	4 For the purposes of this subsection (c), a surviving
219	219	5 spouse whose estate qualifies under this subsection (c)
220	220	6 qualifies for inclusion of the deceased spousal unused
221	221	7 exemption amount if the last deceased spouse of the surviving
222	222	8 spouse died on or after the date that is 24 months prior to the
223	223	9 effective date of this amendatory Act of the 104th General
224	224	10 Assembly. A deceased spousal unused exemption amount may not
225	225	11 be taken into account by the surviving spouse under this
226	226	12 subsection unless the person required to file the Illinois
227	227	13 estate tax return for the estate of the deceased spouse files
228	228	14 an Illinois estate tax return, including an amended return for
229	229	15 a deceased spouse dying prior to the effective date of this
230	230	16 amendatory Act of the 104th General Assembly, on which such
231	231	17 amount is computed and makes an election on such return that
232	232	18 the amount may be so taken into account. Such an election, once
233	233	19 made, shall be irrevocable. No election may be made under this
234	234	20 subsection if the return for the deceased spouse is filed
235	235	21 after the time prescribed by law, including extensions, for
236	236	22 filing such return.
237	237	23 (d) In the case of any trust for which a State or federal
238	238	24 qualified terminable interest property election is made, the
239	239	25 trustee may not retain non-income producing assets for more
240	240	26 than a reasonable amount of time without the consent of the
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251	251	1 surviving spouse.
252	252	2 (e) As used in this Act:
253	253	3 "Consumer Price Index" means the index published by the
254	254	4 Bureau of Labor Statistics of the United States Department of
255	255	5 Labor that measures the average change in prices of goods and
256	256	6 services purchased by all urban consumers, United States city
257	257	7 average, all items, 1982-84 = 100.
258	258	8 "Deceased spousal unused exemption amount" means the
259	259	9 excess of the applicable exemption amount of the last deceased
260	260	10 spouse of the surviving spouse, as determined under subsection
261	261	11 (c), over the amount with respect to which the tentative
262	262	12 maximum State Death Tax Credit would have been determined
263	263	13 under Section 2011 or 2604 of the Internal Revenue Code on
264	264	14 December 31, 2001.
265	265	15 "Indexed deceased spousal unused exemption amount" means
266	266	16 the deceased spousal unused exemption amount, increased on
267	267	17 each January 1 to occur on or after the date of death of the
268	268	18 deceased spouse by the annual unadjusted percentage increase
269	269	19 (but not less than zero) in the Consumer Price Index for the 12
270	270	20 months ending with the preceding September. These adjustments
271	271	21 shall be cumulative and compounded.
272	272	22 "Taxable transfer" means an event that gives rise to a
273	273	23 state tax credit, including any credit as a result of the
274	274	24 imposition of an additional tax under Section 2032A(c) of the
275	275	25 Internal Revenue Code.
276	276	26 "Transferee" means a transferee within the meaning of
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287	287	1 Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
288	288	2 Code.
289	289	3 "Transferred property" means:
290	290	4 (1) With respect to a taxable transfer occurring at
291	291	5 the death of an individual, the deceased individual's
292	292	6 gross estate as defined in Section 2031 of the Internal
293	293	7 Revenue Code.
294	294	8 (2) With respect to a taxable transfer occurring as a
295	295	9 result of a taxable termination as defined in Section
296	296	10 2612(a) of the Internal Revenue Code, the taxable amount
297	297	11 determined under Section 2622(a) of the Internal Revenue
298	298	12 Code.
299	299	13 (3) With respect to a taxable transfer occurring as a
300	300	14 result of a taxable distribution as defined in Section
301	301	15 2612(b) of the Internal Revenue Code, the taxable amount
302	302	16 determined under Section 2621(a) of the Internal Revenue
303	303	17 Code.
304	304	18 (4) With respect to an event which causes the
305	305	19 imposition of an additional estate tax under Section
306	306	20 2032A(c) of the Internal Revenue Code, the qualified real
307	307	21 property that was disposed of or which ceased to be used
308	308	22 for the qualified use, within the meaning of Section
309	309	23 2032A(c)(1) of the Internal Revenue Code.
310	310	24 "Trust" includes a trust as defined in Section 2652(b)(1)
311	311	25 of the Internal Revenue Code.
312	312	26 (Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
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323	323	1 97-636, eff. 6-1-12.)
324	324	2 (35 ILCS 405/5) (from Ch. 120, par. 405A-5)
325	325	3 Sec. 5. Determination of tax situs and valuation.
326	326	4 (a) Illinois estate tax.
327	327	5 (1) For purposes of the Illinois estate tax, in the
328	328	6 case of a decedent who was a resident of this State at the
329	329	7 time of death, all of the transferred property has a tax
330	330	8 situs in this State, including any such property held in
331	331	9 trust, except real or tangible personal property
332	332	10 physically situated in another state.
333	333	11 (2) For purposes of the Illinois estate tax, in the
334	334	12 case of a decedent who was not a resident of this State at
335	335	13 the time of death, the transferred property having a tax
336	336	14 situs in this State, including any such property held in
337	337	15 trust, is only the real estate and tangible personal
338	338	16 property physically situated in this State.
339	339	17 (b) Illinois generation-skipping transfer tax.
340	340	18 (1) For purposes of the Illinois generation-skipping
341	341	19 transfer tax, all transferred property from or in a
342	342	20 resident trust has a tax situs in this State, including
343	343	21 any such property held in trust, except real or tangible
344	344	22 personal property physically situated in another state on
345	345	23 the date that the taxable transfer occurs.
346	346	24 (2) For purposes of the Illinois generation-skipping
347	347	25 transfer tax, none of the transferred property from or in
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358	358	1 a non-resident trust has a tax situs in this State, except
359	359	2 that portion of the transferred property that is real or
360	360	3 tangible personal property physically situated in this
361	361	4 State, including any such property held in trust, on the
362	362	5 date that the taxable transfer occurs.
363	363	6 (c) Valuation. Except as otherwise expressly provided, for
364	364	7 purposes of this Act, the gross value of transferred property
365	365	8 shall be its value as finally determined for purposes of the
366	366	9 federal transfer tax, undiminished by any mortgages, liens or
367	367	10 other encumbrances upon such transferred property for which
368	368	11 the decedent was personally liable.
369	369	12 (d) Special Use Valuation. For purposes of the Illinois
370	370	13 estate tax, the gross value of transferred property used for
371	371	14 farming purposes that constitutes "qualified real property"
372	372	15 allowed under Section 2032A of the Internal Revenue Code, as
373	373	16 in effect on January 1, 2024, for which an election has been
374	374	17 made by the person required to file the Illinois return shall
375	375	18 be its value as determined under Section 2032A without regard
376	376	19 to any limitation on the reduction in the fair market value. In
377	377	20 addition to a qualified heir or member of the family allowed
378	378	21 under Section 2032A of the Internal Revenue Code, any lineal
379	379	22 descendant of a grandparent of the decedent, or the spouse of
380	380	23 any such lineal descendant, shall also be considered a
381	381	24 qualified heir or member of the family; as used in this
382	382	25 subsection, a lineal descendant includes any person who is
383	383	26 legally adopted by the grandparent or legally adopted by a
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